US:

The US economy added more jobs than previous month in March while the unemployment rate ticked lower. Data from the Bureau of Labor Statistics showed that the labor market added 303,000 nonfarm payroll jobs in March. Meanwhile, the unemployment rate decreased to 3.8% from 3.9% in February.

The US service sector remained in growth territory at the end of the opening quarter of the year as success in securing new business led companies to expand their output. Rates of expansion eased in both cases, however. Firms nevertheless continued to increase their staffing levels amid improved optimism about business prospects in the year ahead. The seasonally adjusted S&P Global US Services PMI Business Activity Index ticked down to a three-month low of 51.7 in March from 52.3 in February. That said, the index remained above the 50.0 no-change mark and therefore signalled a rise in business activity for the fourteenth consecutive month. Looking at business trends across the combined manufacturing and service sectors, the S&P Global US Composite PMI Output Index registered 52.1 in March, down marginally from 52.5 in February but still pointing to a solid monthly increase in overall business activity.

A report released by the Commerce Department showed the U.S. trade deficit widened in the month of February. The Commerce Department said the trade deficit increased to $68.9 billion in February from a revised $67.6 billion in January. The wider trade deficit in February matched the largest gap between imports and exports since the deficit reached $72.2 billion last April.

The Labor Department released a report showing first-time claims for U.S. unemployment benefits rose in the week ended March 30th. The report said initial jobless claims climbed to 221,000, an increase of 9,000 from the previous week's revised level of 212,000. The Labor Department said the less volatile four-week moving average also crept up to 214,250, an increase of 2,750 from the previous week's revised average of 211,500.

Eurozone:

The euro area economy moved back into expansion territory at the end of the first quarter, halting a sequence of contraction stretching back to June last year, according to the latest HCOB PMI survey. Renewed growth in business activity was aided by a stabilization of demand and continued efforts to clear backlogs of work, underlying data showed. A third successive monthly gain in net euro area employment was also recorded amid a continued resurgence in business confidence. Expectations for business activity were at their most optimistic since February 2022 during March. An easing of inflationary pressures was registered at the end of the first quarter. That said, increases in both input costs and output charges were above their pre-pandemic averages.

The seasonally adjusted HCOB Eurozone Composite PMI Output Index, a weighted average of the HCOB Manufacturing PMI Output Index and the HCOB Services PMI Business Activity Index, rose to a ten-month high of 50.3 in March, from 49.2 in February and crucially, above the 50.0 no-change mark for the first time since May last year.

In February 2024, compared with January 2024, the seasonally adjusted retail trade volume decreased by 0.5% in the euro area and by 0.4% in the EU, according to first estimates from Eurostat, the statistical office of the European Union. In January 2024, retail trade volume remained unchanged in the euro area and grew by 0.2% in the EU. In February 2024 compared with February 2023, the calendar adjusted retail sales index decreased by 0.7% the euro area and by 0.2% in the EU.

UK:

The seasonally adjusted final S&P Global UK Services PMI Business Activity Index registered 53.1 in March, down from 53.8 in February. The latest reading was comfortably above the neutral 50.0 threshold, but lower than the earlier 'flash' figure (53.4) and signalled the slowest rate of business activity expansion since November 2023. March data pointed to a solid increase in business activity across the service economy, which extended the current period of expansion to five months. Strong wage pressures and rising transport costs pushed up input costs in March.

The rate of prices charged inflation at UK service sector firms nonetheless eased to its lowest for six months amid some reports of constrained pricing power. At 52.8 in March, the seasonally adjusted S&P Global UK PMI Composite Output Index eased slightly from February's nine-month high of 53.0 but remained indicative of a solid upturn in private sector business activity. Moreover, output growth broadened out from the service economy to the manufacturing sector in March.

UK house prices declined for the first time in six months in March, data published by the mortgage lender Halifax showed. House prices dropped 1.0 percent on a monthly basis in March, in contrast to the 0.3 percent rise in February. This was the first decrease since September. On a yearly basis, house price growth eased to 0.3 percent from 1.6 percent in the prior month. Prices were expected to climb 1.5 percent.

Japan:

Japan's Composite PMI for March 2024, revised down to 51.7 from 52.3, still reflects the third straight month of growth in private sector activity, the strongest since late September. The service sector drove expansion, with new orders at a seven-month peak, while manufacturing production's decline eased. Job creation was the sharpest since May 2023, but outstanding business rose marginally, as input prices and selling prices both increased notably.

Japan's leading index improved in February to the highest level in one-and-a-half years, preliminary data from the Cabinet Office showed. The leading index, which measures future economic activity, rose to 111.8 in February from 109.5 in the previous month. Further, this was the highest score since August 2022, when it was 112.9. Meanwhile, the coincident index posted 110.9, down from 112.1 a month ago. The coincident index measures the current economic situation. The lagging index strengthened to 107.4 in February from 106.0 in the prior month.

Asia-Ex-Japan:

Caixin/S&P Global China manufacturing purchasing managers’ index was 51.1 in March — its strongest since February 2023 — after coming in at 50.9 in February. China’s National Bureau of Statistics data showed the country’s official manufacturing PMI coming in at 50.8 in March, its strongest reading since March last year.

Amid the increasing protectionism and policy uncertainty, Developing East Asia is expected to log slower growth this year and next but, the pace is likely to be faster than the rest of the world on recovering global trade, the World Bank said in its East Asia and Pacific April 2024 Economic Update. The Washington-based lender downgraded East Asia's growth outlook for this year to 4.5 percent from 5.0 percent. Likewise, the projection for next year was trimmed to 4.3 percent from 4.5 percent.

The manufacturing sector in Australia continued to contract in March, and at a faster pace, the latest survey from Judo Bank revealed with a manufacturing PMI score of 47.3. That's down from 47.8 in February, and it moved further beneath the boom-or-bust line of 50 that separates expansion from contraction. Incoming new orders for Australian manufactured goods declined for a sixteenth successive month in March.

Outlook:

The global interest rates might be on the way down in coming months though more than a year of ultra-tight monetary policy in leading global economies has pushed up the debt burdens. The International Monetary Fund (IMF) noted in a latest research paper that inflation-adjusted interest rates are well above post global financial crisis lows, while medium-term growth remains weak. Persistently higher interest rates raise the cost of servicing debt, adding to fiscal pressures and posing risks to financial stability. Decisive and credible fiscal action that gradually brings global debt levels to more sustainable levels can help mitigate these dynamics.

According to the IMF research, debt sustainability depends upon four key ingredients: primary balances, real growth, real interest rates, and debt levels. Higher primary balances—the excess of government revenues over expenditures excluding interest payments—and growth help to achieve debt sustainability, whereas higher interest rates and debt levels make it more challenging.

Public debt as a fraction of gross domestic product has increased significantly in recent decades, across advanced as well as emerging and middle-income economies. It is expected to reach 120 percent and 80 percent of output respectively by 2028. The IMF research noted that countries should start to gradually and credibly rebuild fiscal buffers and ensure the long-term sustainability of their sovereign debt. It also highlighted that structural reforms should not be postponed.